By Myron Levin, Lilly Fowler and Stuart Silverstein, Fair Warning

The stump of one of more than 2,000 trees allegedly cut by a billboard company in North Florida. A grand jury said the state wrongly issued cutting permits.

Robert J. Barnhart was a crew chief for a billboard company, and a soldier in a war on trees.

Trees were the enemy if they spoiled the view of a billboard. On days of an attack, Barnhart, 27, would arrive by dawn at Lamar Advertising Co. in Tallahassee, Fla. After removing the magnetic Lamar logo from a company truck, he would set forth with a machete, a hospital mask and a container of what he described as a “pretty gnarly” herbicide.

It was all about being fast: Hack into the roots or base of the tree, douse the wound with herbicide, and get out of there. The Lamar executive who gave the orders, said Barnhart, called it “a hit and run.”

Barnhart’s account, detailed in court papers and in statements to investigators, is the focus of a criminal investigation. It also is the basis for a whistleblower suit in which Barnhart, who through his lawyer declined to be interviewed, maintains that he was fired because he would not keep poisoning trees. His claims are supported by sworn testimony from Barnhart’s former supervisor, Chris Oaks, who admitted that he, too, had illegally poisoned trees before Barnhart took over in 2009 as poisoner-in-chief.

As long as there have been billboards, trees have been getting in the way. And billboard companies have been removing them—sometimes legally, sometimes not. News archives are replete with accounts of mysterious tree disappearances near billboard sites. Usually, no one gets caught, due to lack of evidence or to officials failing to aggressively pursue those responsible.

Fewer trees means more viewing time for motorists, and more money for billboard operators. A 500- foot clearance in front of a sign creates more than five seconds of viewing time for a motorist going 60 mph.

It’s uncertain if the Tallahassee tree-poisonings were isolated, or reflect a pattern at Lamar. The Baton Rouge, La.-based company has nearly 150,000 billboards, more than any other U.S. outdoor advertising firm.

Barnhart and Oaks said they acted under orders from Lamar’s former regional manager, Myron A. “Chip” LaBorde, who ran company operations in Florida and Georgia and was past president of the Florida Outdoor Advertising Association LaBorde died of pancreatic cancer last summer.

Hal Kilshaw, a Lamar vice president and chief spokesman, declined to discuss the criminal investigation, but said “cutting of trees or poisoning of trees without the required permits would be contrary to company policy.”

Robert Barnhart and his wife, Kimberly. Barnart claims he was fired by Lamar Advertising last year when he refused to continue poisoning trees

Charges in the tree-poisoning case could be filed soon. Meanwhile, another tree-killing binge in the Florida panhandle has also drawn attention. In that episode, billboard operator Bill Salter Outdoor Advertising cleared more than 2,000 trees from public rights of way to enhance views of its signs.

Florida transportation officials acted “in flagrant violation of the law” in issuing permits for the cutting, a grand jury found in January, because, among other things, they did not require Salter to compensate the state for the loss of the trees, valued at $1 million to $4 million. The permits were issued to Salter after a state legislator, Greg Evers, intervened by making calls to the state Department of Transportation. The agency is currently negotiating with Salter for repayment.

Tree pruning also happens routinely, and legally, by arrangement between billboard operators and private landowners. The industry has lobbied for state laws to allow tree cutting along public highways under certain conditions. According to the Outdoor Advertising Assn. of America, the industry trade group, 29 states, including Florida, have “reasonable” regulations on clearing vegetation that blocks views of signs. The group says on its website: “The OAAA discourages vegetation control that is not in compliance with state and local laws and regulations.”

However, environmental groups have criticized these laws, asking why publicly owned trees that provide beauty and shade should be removed to accommodate advertising signs. Though billboard companies pay for the cutting, critics say permit fees and compensation for destroyed trees do not meet the real cost to taxpayers. Moreover, they note, in states that permit vegetation removal, illegal cutting still takes place.

Lamar’s Kilshaw said his company’s record is good. “We have over 150 offices, we have thousands of employees, we’ve been in business over 100 years,” he said. The record shows Lamar is “doing the right thing almost all the time, almost everywhere.”

“An Honest, Legitimate Mistake”

In 2008, Lamar was sued by the state of Connecticut after the company and a tree service trespassed on state land and removed 83 trees along Interstate 84, including oak, spruce, maple and birch trees up to 37 inches in diameter. They “swept a swath of destruction,” said then-Attorney General Richard Blumenthal, “obliterating a vital environmental buffer protecting homeowners from noxious noise and views.”

The problem was that Lamar had a permit to trim—not cut down—trees. It also felled trees outside the permitted area.

It was “an honest, legitimate mistake,” Kilshaw said, adding that a state transportation official had observed the work without raising objections. But a judge found Lamar liable in October, 2010. In lieu of paying damages, Lamar agreed to fund a replanting program for an estimated $181,000.

In 2009, Lamar was forced to pay about $182,000 to an irate Ohio couple for illegally felling 34 trees on their property to improve views of a sign.

The dispute began in the late 1990s when, according to John Blust, he and his wife rebuffed Lamar’s offer to plant a sign on land they owned in the Dayton suburb of Beavercreek.

A neighbor proved more obliging, and the billboard went up there. But it turned out that the Blusts’ trees were in the way. They lived a few miles from the property, and did not learn of the destruction of their woodland until alerted by a cousin.

Blust told FairWarning that he sought compensation, and “If they had sent me $3,000, it would have been all over.” But a Lamar executive “laughed at me over the phone from Baton Rouge, Louisiana,” said Blust, who then decided to sue.

A jury awarded the Blusts more than $2.2 million in punitive damages. Appeals dragged the marathon case into 2009, when an appeals court ruling led to Lamar paying damages and attorney fees.

“In that case, our contractor made a mistake,” Kilshaw said, “and simply went across a property line, and we ultimately paid on that.”

For his part, Blust, 76, said he was “satisfied that I caused them pain. Did we make a lasting impression on the management of Lamar? If they’re still cutting down trees, I guess we didn’t.”

What is unusual about these episodes is that someone got caught. More often, over the years, the culprits remained unknown or were not aggressively pursued by authorities.

For example, a 1985 report by the General Accounting Office cited dozens of incidents in Georgia of illegal tree cutters acting with impunity, including a case in which about 500 trees were poisoned near three signs along interstate highways.

In Louisiana, said the GAO, “over 2,000 feet of vegetation and trees were cut and cleared to enhance the visibility of two signs. We counted over 900 stumps from destroyed trees at this site.”

In a 1996 deposition, a former billboard company tree trimmer testified that he had cut down and poisoned trees in the Los Angeles area for many years, usually without the owners’ consent. The former employee, Fred Jackson, worked until the late 1980s for two large billboard companies, Foster & Kleiser and Patrick Media, that eventually merged and were absorbed by Clear Channel Outdoor.

Jackson said he occasionally was confronted about what he was doing, and would make up a lie. It might be “‘I’m working for the Edison Company,’” Jackson testified. “That was a great one.”

More recently, illegal tree clearing near billboards and “supergraphics’’—giant ads draped on buildings—has been a problem in Southern California, said Dan Freeman, an official with the state Department of Transportation, or Caltrans.

“The billboard industry—well, my impression of them is they’re kind of lawless,” said Freeman, Caltrans’ deputy director of maintenance for Los Angeles and Ventura counties. “They pretty much do whatever they want.”

“We’ve been victim a number of times to people who come in the middle of the night, with a chainsaw, and just kind of clear cut the area immediately in front of one of these supergraphics or a large billboard,” Freeman told FairWarning.

“And, of course, we call them [the sign company], and they say, ‘We have no idea who could have done it. My, what a terrible thing.’ They don’t own up to it. We have had a very, very difficult time in getting traction on prosecuting them.”

The Right To Be Seen

Billboard companies have sometimes claimed an inherent right to have unimpaired views of their signs. If revenues go down because of public trees, they have argued, public agencies should pay damages. This has been a hard sell.

For example, a Tennessee appeals court rejected an industry lawsuit against the state department of transportation over its failure to maintain unrestricted views of roadside signs.

“It is true that wild vegetation, as well as that planted by the State, has and will have a normal tendency to grow taller,” said the 1979 ruling. “Plaintiffs seem to insist that the licensing of a billboard confers some special right of visibility or imposes some special duty upon the State to maintain visibility of the licensed billboard. No authority has been cited or found to sustain this novel theory.”

In 2006, the California Supreme Court rejected claims of billboard operator Regency Outdoor, which had sued the city of Los Angeles, claiming it lowered the value of its signs by planting palm trees for a beautification project.

“The right to be seen from a public way…simply does not exist,” the Supreme Court ruled. “Regency cannot claim unfair surprise from the plantings. Local governments have long planted trees along roads for aesthetic reasons, to lessen the burdens of climate, and for other salubrious purposes.”

So the industry has turned to state legislatures to establish the right to be seen. Under laws or regulations of most states, billboard operators can legally cut back trees and other vegetation along state and federal highways. Typically, they must pay for a permit, file a work plan, and either replant or pay for lost trees.

The Outdoor Advertising Assn. of America failed to respond to interview requests, but in an email described vegetation control as “a common, longstanding practice along roadways for the sake of safety and visibility.”

Once state rules are in place, billboard companies often lobby state legislatures to relax restrictions and expand the freedom to cut. In the past year, for example, the industry pushed through such changes in Georgia, North Carolina and Wisconsin.

In Georgia billboard companies won more freedom to clear trees, though the new law is tied up in a court challenge. The industry’s legislative success followed years of cultivating lawmakers. From 2001 through 2010, billboard owners and the Outdoor Advertising Association of Georgia contributed at least $467,522 to candidates for state office, according to a report by the advocacy group Scenic Georgia.

The Outdoor Advertising Association also did some wining and dining, last year hosting 34 Georgia legislators and two board members of the state Department of Transportation at a golf outing at the Reynolds Plantation resort, according to The Atlanta Journal-Constitution.

A Georgia Department of Transportation spokeswoman said that in the past five years, the agency has completed investigations into 20 complaints of illegal tree cutting, and collected about $203,000 in compensation.

In North Carolina, the industry-backed law passed last July expanded the cutting area to up to 380 feet on each side of billboards—up from 250 feet before. This translates into extra viewing time of 1.5 seconds for motorists approaching billboards at 60 mph. State transportation officials estimated that up to 200,000 trees could be removed in the next five years as a result.

From 2005 through June, 2011, billboard interests donated at least $206,000 to state legislative and gubernatorial candidates in North Carolina, according to a report by the nonprofit group Democracy North Carolina, and research by FairWarning.

“They’ve got a lot of money, and it’s amazing how cheaply legislators can be bought,” said North Carolina resident Charles Floyd, a retired University of Georgia business professor who has written extensively about the billboard industry and is critical of the new law.

Even in states like North Carolina that provide a legal means to enhance billboard views, incidents of illegal cutting and poisoning still occur. In some respects, loosening restrictions is the path of least resistance, reducing the number of violations and need for enforcement.

“If you legalize vandalism,’’ Floyd complained, “that helps out a lot.’’

Poisoned trees near North Carolina billboard site in 2006. Courtesy of the North Carolina Department of Transportation.

Since July, 2006, the North Carolina Department of Transportation recorded 88 incidents of illegal tree removal near billboards, according to agency data reviewed by FairWarning.

The cost to the state was $923,000 under a formula based on the size of lost trees. Of that amount, records show, the state was able to collect only about $39,000. Without admitting liability, Lamar paid $18,487.50 to settle one of the cases.

 Criminal Probe in Florida

Soon after Barnhart filed his whistleblower suit in federal court in Tallahassee, he led state agriculture officials to an oak tree he claimed he had poisoned next to a CVS pharmacy in Tallahassee. When the lab results came back in October, they revealed a herbicide, Triclopyr, in soil and vegetation samples.

He told officials it was one of seven to 10 trees he had illegally poisoned since 2009. Sometimes, he said, he used a machete before pouring in the poison, other times drilled holes in a tree, and on still other occasions he simply cut them.

Barnhart has been granted immunity by Leon County State Attorney Willie Meggs. Asked to comment on the criminal probe, Meggs said his office is continuing to gather information.

In a deposition taken in the whistleblower case, Chris Oaks, Barnhart’s supervisor, confirmed Barnhart’s account. Oaks admitted to poisoning trees himself under orders from his boss, LaBorde.

Oaks, 35, claimed he initially balked, saying he thought Lamar must first get permits.

“And he (LaBorde) told me, he said to just jump over the fence and do what needs to be done and kick a little dirt over it,” Oaks testified, “and if you don’t know how to do that, I’ll take out my gun and I’ll shoot you in the head.”

Oaks figured LaBorde was joking. But “I felt then that I needed to do what the man was telling me for fear—not for death, I didn’t really think he would kill me, but I did feel like it was threatening to my job,” Oaks said.

“I just want to get it clear that none of this was me,” Oaks said. “I did not want to do any of this.”

Barnhart said fear of getting caught on a surveillance camera and, according to his lawyer, pressure from his wife led him to come forward. Barnhart said that after suffering a back injury and going on light duty, he told managers that he would no longer poison trees when he came back. In August, he says, he was fired.

Lamar contends it never fired Barnhart. The company’s response is less clear cut on the other alleged violations, such as criminal mischief and illegal handling of poisons.

“Any act or omission by Lamar was done in good faith,” the company said in court papers. “To the extent that the actions of any Lamar employee were, in fact, in violation…, those actions directly violated Lamar’s corporate policies and procedures and were, thus, beyond the course and scope of their employment.”

FairWarning (www.fairwarning.org) is a nonprofit, online investigative news organization focused on safety and health issues.

Support for this story came from the Fund for Investigative Journalism (www.fij.org).

By Karla Bowsher, BrowardBulldog.org 

Cessna P337H Skymaster

A deadly mix of pilot error and an air traffic controller’s negligence has led a federal judge to order the United States to pay $4.4 million to the family of a wealthy Boca Raton businessman who crashed his private plane in bad weather six years ago.

The National Transportation Safety Board determined in 2007 that Michael Zinn, 52, lost control of his Cessna P337H while flying alone through, rather than around, stormy conditions.

Miami U.S. Magistrate Judge Edwin G. Torres, after presiding over a multi-day bench trial, ruled two weeks ago that Zinn was primarily – 60 percent – responsible for his own death, but that failures at Miami’s Air Route Traffic Control Center also contributed significantly to the accident.

“Neither the air traffic controllers nor Michael Zinn were bad actors in this tragic accident,” he wrote in his 97-page findings of fact. “History shows us that a pilot’s greatest enemy, more often than not, is nature’s challenges.”

The ruling supports the NTSB’s determination that the probable cause of the Oct. 19, 2005 accident was Zinn’s poor flight decisions and controller Harvey Pake’s failure to provide Zinn with weather conditions and assist him in navigation.

“Pake breached his duty of care in providing complete and accurate weather briefings when it was possible to do so and highly pertinent to Zinn’s route of flight,” the judge wrote.

Pake did not warn Zinn that he was flying into hazardous weather and allowed Zinn to fly closer to it, Torres said. “Compounding that breach of the duty of care, he then failed to provide any navigational assistance when the pilot requested,” Torres wrote.

“I’M GOING TO DIE”

Zinn lost control in a severe thunderstorm. As he plunged to earth, controllers and pilots heard him shout “Help!” and “I’m going to die!” over a period of two minutes.

Then, at 6:59 p.m., an American Airlines pilot radioed, “He’s not yelling ‘help’ any more by the way.” The plane crashed into a house in Port St. Lucie. A young man living there escaped without injury.

Pake, a Weston resident, declined to comment. He still works at the FAA’s Miami traffic control center, currently as a front line manager, according to the FAA Employee Directory.

FAA spokesman Jim Peters, based in New York, declined to comment, stating that the U.S. Department of Justice represented the FAA in the lawsuit. The Department of Justice did not respond to requests for comment.

Steven C. Marks, a lawyer for Zinn’s estate, likewise did not respond to requests for comment. Marks, of Miami’s Podhurst Orseck, had sought damages in excess of $54 million.

Zinn departed Boca Raton Airport en route to Myrtle Beach, S.C. to play a round of golf. Although he obtained his pilot’s license in 1982, he had not flown for about four months.

Zinn “set in motion the chain of events that led to the crash” by  initially abandoning his intended route to Myrtle Beach in favor of a more direct route where he knew he would encounter thunderstorms, the judge said. Then, he added, Zinn approached thunderstorm-like conditions even though the FAA’s Aeronautical Information Manual states that flying within 20 miles of a thunderstorm “should be approached with great caution, as the severity of turbulence can be markedly greater than the precipitation intensity might indicate.”

CONTROLLER’S FAILURE

For his part, Pake provided weather readings “directly in front of Zinn – at his twelve o’clock,” the judge found. But navigation rules required that he also indicate weather conditions to the west.

“With knowledge that Zinn was flying (using instruments) in a small plane with limited weather capability, this controller failed to provide sufficient accurate weather information to allow Zinn to make informed decisions,” Torres wrote.

Once in the storm, court records say, Zinn reduced power in response to turbulence even though pilots are trained not to do so in such situations. He quickly lost control and plummeted almost 10,000 feet before crashing. Zinn, 52, was killed on impact.

The multimillionaire had owned a home in Boca Raton since at least 2000, according to property records. As an entrepreneur and businessman, he made regular trips between Boca Raton and his hometown of Kingston, N.Y., where his businesses were based.

In 1976, at 23, Zinn founded alternative energy company Bio-Energy Systems Inc., now Besicorp Group. The company was later acquired for $105 million, according to The New York Times.

In 1992, the Times reported Zinn served as campaign finance manager for U.S. Representative Maurice D. Hinchey, D-N.Y.  In 1997, Zinn pleaded guilty to campaign finance fraud charges and was sentenced to six months in federal prison. He was released the following year.

Zinn’s adult daughter, Randi Zinn, and a cousin, Frederic Zinn, co-represented his estate in the lawsuit.

Randi Zinn did not respond to interview requests.

Karla Bowsher can be reached at KBowsher@BrowardBulldog.org.

By Dan Christensen, BrowardBulldog.org

Gary Gross

There is no justice for Marion Green and others victimized by stock broker and swindler Gary J. Gross.

He fleeced dozens of his clients from across South Florida, many he worshiped with at a Boca Raton synagogue. Their total losses were as much as $20 million. Federal arbitrators ruled Gross should pay three-dozen of his victims $7.5 million. Other big dollar awards were imposed against him, too, but so far no one has seen a dime.

The FBI added some salt to the victims wounds in 2009 when it notified the victims that its criminal investigation had been dropped without referring the matter to the U.S. Attorney’s Office for prosecution. No explanation was given.

Green, 81, turned to the FBI hoping to get help on whether she could speak at Gross’s sentencing for misdeeds in an unrelated bank fraud case.  She says she called the case agent repeatedly, but got no calls back. Finally, she drove to the FBI’s West Palm Beach office. The agent would not come out to meet with her.

Green said she wanted the judge to hear her story of how because of Gross she has been forced out of retirement to work as an interior designer and Realtor. She now supports herself and her husband, Martin, 85, a retired film editor for 60 Minutes. Others in her family were also victimized.

“I wanted to talk to the judge and tell him what this man did,” she said.

Her attorney tells a similar tale.

“I could have paraded probably close to a dozen clients who would have liked to explain to the court how Gross’s misconduct changed their lives – where their kids could go to school, the kinds of places they live in,” said Green’s Boca Raton attorney, James Sallah. “We were never asked…My calls to the U.S. Attorney’s Office were never returned.”

SWINDLER HOME FOR THE HOLIDAYS

Rather than take up the cause of Green and others that the U.S. Securities and Exchange Commission determined were taken advantage of by Gross, the FBI and federal prosecutors pursued charges he defrauded a bank.

Last week, U.S. District Judge Kenneth Ryskamp allowed Gross to go home for the holidays before spending 27 months in prison in the bank fraud case. The judge ordered Gross must report to prison on or before Jan.  6.

Ryskamp also ordered Gross, 59, to pay $215,399 in restitution to the bank.

Gross’s lawyers said in court papers that he is destitute.

Gary Gross's Boca Raton home

Though the case was about bank fraud, Gross’s sprawling investment fraud was at the center of a pre-sentence disagreement. The U.S. Probation Office included details about it in a pre-sentence investigation read by the judge. Gross’s lawyers argued it was “irrelevant,” say court filings.

While that report is confidential, those court papers disclose that it discussed Gross’s practices at the synagogue.

While working at the now closed Boca Raton office of Axiom Capital Management, Gross employed a variety of abusive sales practices, including unauthorized trading in penny stocks, to run up enormous commissions for himself.  He hid it for a while by doctoring account statements, said the SEC, which banned him from the  stock trading business in 2008.

Many former clients have said they trusted Gross because of his devotion to Orthodox Judaism. He sometimes wore his prayer shawl to the office.

But he also displayed the signs of success. He wore expensive clothes, drove a Jaguar XJ; and lived in a luxurious 10,000 square foot home with a country club membership at the Boca Raton Polo Club. He bought clients show tickets and took them expensive dinner at fine restaurants.

About 100 former Axiom clients, including actor Henry “The Fonz” Winkler of TV’s Happy Days – later became Gross’s creditors when he filed for bankruptcy in 2007 after another client arbitration award of $418,000.

When the pre-sentence investigation brought up the investment fraud, Gross’s South Florida lawyers – Jon Sale, Benson Weintraub, and Jon May – vigorously sought to counter it. They stuffed the court file with testimonials detailing Gross’s practices as an Orthodox Jew and his “profound sense of goodness and care.”

“The PSI alleges that Mr. Gross ‘targeted’ Jewish investors. Nothing could be further from the truth,” defense court papers say.

Sale told Broward Bulldog in an interview that Gross settled the case brought against him by the SEC because he “couldn’t afford to defend himself” against those civil charges.

AUSCHWITZ V. BUCHENWALD

Likewise, defense court papers cite numerous charitable acts by Gross, including his alleged end-of-life care for a now dead ex-client who also lost money, Murray Chernick. The papers noted Chernick’s late wife was a survivor of Auschwitz.

The reference to the infamous Nazi death camp served as a counterweight to another of Gross’s elderly investment victims, Henry Drabin, who was a survivor of Buchenwald. Drabin and his wife Rosalind, have said they lost over $500,000 after Gross sank their savings into highly speculative penny stocks without their permission, reaping large commissions along the way.

Had Gross gone to trial the government said it was prepared to prove that Gross conspired with a Boca Raton loan broker named Francis “Frank” Santa in 2007 to dummy up applications to obtain four loans from Wachovia Bank – now part of Wells Fargo – that he couldn’t quality for legitimately. Gross used the money for his “personal benefit,” papers say.

A dozen people, including corrupt bank officers and customers – like Gross – of Santa’s Palm Beach Business Consultants have pleaded guilty in the case. One of those defendants, Jeanne Ward, a former investigative analyst for the Broward Sheriff’s Office, received a sentence totaling 33 months.

Sentencing for Santa is set for Thursday, December 1.

By Lynn Walsh, BrowardBulldog.org  

Raanan Katz

A First Amendment battle has erupted between a prominent South Florida developer and a blogger, who so far has only been identified as “John Doe.”

Raanan Katz, a minority owner of the Miami Heat, and his family-owned company R.K. Associates are suing the anonymous blogger for defamation and libel for reports he claims are false and malicious.

The blogger’s Fort Lauderdale attorney, Robert Kain, argues in court papers that his client is a “citizen journalist” deserving of First Amendment protection because his reporting on Katz is about “matters of public concern.”

“Doe is an anonymous citizen journalist critically reporting what he considers to be abusive litigation tactics and prior criminal convictions by a well know public person Raanan Katz and Katz’ companies,” the papers say.

Katz filed the case in state court in June, but it has since been removed to federal court in Miami. Katz dropped an additional claim for false advertising against the blogger last week.

“The true thrust of our case is defamation,” said Todd Levine, a Miami lawyer for Katz and the company.

Kain calls Katz’s litigation a “classic slap suit” by a big developer seeking to suppress a critic.

“There is no defamation, you can read it,” Kain said in an interview. “Mr. Katz needs to realize that sometimes in doing business you will be criticized.”

In the blogger’s defense, Kain includes the assertion that his client has a First Amendment right to “maintain his anonymous status.”

Levine calls the nameless blogger a “coward hiding behind the cloak of the Internet.”

Katz’s son, Daniel Katz, vice president and owner of the company, is also a plaintiff against John Doe. The blog details previous legal battles and activities involving Raanan, his son and their real estate company.

KATZ AND HIS PROMINENCE ARGUED

R.K. Associates owns over six million square feet of commercial space in Florida and New England, including 14 shopping centers in South Florida, the company website says. Their properties include two in Hallandale Beach and the landmark Searstown Plaza in Fort Lauderdale.

The privately-held company was founded by the elder Katz, who remains the principal owner of the company. (View the South Florida properties owned by R.K. Associates in the map below.)

View Raanan Katz in South Florida in a larger map

Katz, an Israeli immigrant, has a street named after him in Sunny Isles Beach, according to news articles. The renaming of Northeast 170th Street at Collins Avenue was done as part of a $7 million eminent domain settlement with the city.

The elder Katz was called “one of the most prolific real estate owners in Miami-Dade” in a 2008 article in Miami New Times.

John Doe publishes articles about the Katzes and their real estate company in the blog  in called “RK Associates.” It is published free on blogspot.com, a Google-owned company. The domain is RKAssociatesUSA and the information is also posted on a second website based in the United Kingdom.

The archive on the U.S. site shows 22 posts about Katz and his company starting in May.

“There are some things that are taken from other people’s claims that may not be defamation,” Levine acknowledged. “But there are other parts that really surpass opinions and come out to be a conclusion or moral of a story…to [falsely] show that the company and my clients are ‘criminals’…a clear indication that my clients are bad people.”

The blog details previous legal battles and activities involving Raanan, Daniel and their real estate company. A recent post claims the company “ripped off the single mother of a special needs child.”

According to a post dated July 24: “RK Associates, Raanan Katz, and Daniel Katz automatically renewed her lease, without her knowledge and consent, from January 1, 2009 for the next five years and filed legal action against her claiming damages for five years in advance in the amount of about quarter a million dollars.”

Levine said some content posted by John Doe is accurate, but the lawyer did not elaborate on what was true.

TRUTH AS A DEFENSE

Attorney Jon Kaney, a board member of the Florida First Amendment Foundation, said the blogger has a First Amendment right to publish stories if what is being said can be supported by facts.

“The blogger’s opinion, if it is based on facts that he has disclosed or in this case linked to, and he tells the reader what the company is doing and then shares his opinion that he believes it is inappropriate or whatever the case may be, then that’s protected.”

Kaney is a partner at Cobb & Cole in Daytona Beach.

“Truth is always a defense to defamation,” Levine acknowledged. “But [the blogger] would have to prove this. And this person signs off every post with ‘always true.’ He is saying, this is the only spot where you are going to find information about my client.”

Other articles on the blog discuss alleged racketeering charges against the Katz’ and their company and allegations of falsely asking for rental reimbursement associated with a property the company owns.

Levine says the blogger and his lawyer are trying to make people believe Raanan Katz is a public figure, which would require Katz to offer a higher level of proof to win in court. The Katzes “are not Donald Trump-type businessmen that make themselves out to be celebrities. He owns shopping centers; he doesn’t have a radio show; he doesn’t have a magazine like Oprah;, he isn’t on red carpets.”

Having Sunny Isles Beach name a street after the developer isn’t enough to make him a public figure, Levine argues.

“If I told someone to meet me at Raanan Katz Boulevard they wouldn’t know where that was,” Levine said, comparing the street named after Katz to a school driveway.

Sunny Isles Beach has also named a public gymnasium after Katz and his wife.

Raanan Katz was an original partner of the expansion franchise for the Heat and has “been a fixture at courtside” games since the team’s inaugural season in 1988, according to the company website.

WHO IS JOHN DOE?

While much is publicly known about Raanan Katz, that can’t be said for his critic.

On one of his blogs, Doe identifies himself only a male living in Boston.

The Katz complaint initially accused “John Doe” of being a competitor. But Levine has backed away from that contention, and now says he believes Doe “is a disgruntled employee or disgruntled tenant,” he said.

Either way, Levine intends to find out precisely.

He said a subpoena has been issued to Google in an attempt to unmask John Doe.

By William Gjebre, BrowardBulldog.org 

Broward County Jail

A former Broward County Jail inmate says he became impotent after he was forced to swallow a powerful anti-psychotic drug he wasn’t prescribed, then suffered a painful erection for five days before nurses and jailers finally responded to his pleas for help. 

A doctor eventually ordered Randon (Randy) P. Campbell rushed to the emergency room at Broward General Medical Center for treatment of priapism, a painful long-lasting erection. As a result of the medication errors and delay in treatment, Campbell was forced to undergo multiple surgeries and was later “diagnosed with permanent impotency,” court papers say. 

Court documents say that BSO correctional officers and a nurse laughed at Campbell after he sought help for the painful, unwanted and embarrassing condition that he attempted to hide by wearing his shirt untucked. The amused nurse allegedly told him to “work it off.” 

Campbell, 46, recently settled his 2008 lawsuit against Broward jail healthcare provider, Armor Correctional Health Services Inc. The terms are confidential, and the company’s lawyer declined comment. Now, Campbell is pressing on with a potentially big money civil action in circuit court against the Broward Sheriff’s Office. 

Sheriff Al Lamberti said the BSO will not settle. 

“Armor settled. We didn’t,” Lamberti said. “We don’t think we did anything wrong.” 

Attorneys for both sides – Daniel Harwin for Campbell and William Tucker Craig for BSO – declined comment. 

A judge refuses to dismiss 

Six weeks ago, in a parallel federal civil rights suit in Fort Lauderdale, Campbell’s case appeared to take a significant step forward when a judge denied BSO’s request to toss the case out of court. 

“The Court finds that it would be possible for a jury to conclude that Defendant acted with deliberate indifference in delaying plaintiff’s medical treatment,” U.S. District Judge William J. Zloch stated in his March 28 order. 

The federal case was set to be tried this week. But last week, for strategic reasons not explained in court papers, the two sides jointly agreed to dismiss that case. Instead, they will fight it out in state court. 

Court records outline the events surrounding the case. 

Campbell’s ordeal occurred while he was a pre-trial detainee in the county jail from August 1, 2005 through March 24, 2006. According to the BSO media relations office, Campbell was in jail for violating an injunction in a domestic violence case. 

A doctor had prescribed Campbell, then 40, to receive Clonidine (0.2 mg) daily for hypertension and Vistaril, as needed, for anxiety. Those were the only drugs he was prescribed to receive while in jail. 

On Dec. 1, 2005, however, Campbell’s nighttime medications included another drug, chlorpromazine, which is also known as Thorazine. Campbell immediately informed the nurse the medication was not intended for him. Nonetheless, he was ordered to take it by the nurse and a guard who are not identified in the complaint. 

Court records indicate the Thorazine was supposed to go to another inmate with the last name of Campbell. 

Shortly afterwards, Randon Campbell began feeling ill, describing dizziness and lightheadedness. 

The next day, Campbell awoke with an erection that lasted for five days. Priapism is both a known and common side effect of Thorazine, the lawsuit said. 

When the nurse handed out that morning’s medication, Campbell was again told to take the Thorazine. He gave the nurse a written note that had developed a sustained and painful erection, and, to explain his untucked shirt, informed guards. 

“The guards laughed and refused to alert the medical staff,” the lawsuit said. 

That evening, Campbell was again offered the Thorazine, but didn’t take it after finally convincing the nurse of the error. He wasn’t given it again. 

Still, Campbell’s painful erection continued. And despite his pain, and his repeated requests for help, no action was taken to provide him with appropriate care, the lawsuit said. Instead, nurses gave him Advil. 

Campbell “begged” for help 

Finally, on the afternoon of December 6, the pain had become unbearable. Campbell could no longer walk. He “begged” a guard to take him to the infirmary, the suit said. 

The guard agreed, and took him to Armor Correctional’s clinic where doctors quickly had Campbell transferred to Broward General. 

Emergency room doctors diagnosed priapism. Campbell underwent initial surgery and ultimately suffered from what the lawsuit calls “severe residual erectile dysfunction.” 

The state lawsuit against Armor alleged that its negligent care forced Campbell “to endure needless multiple and painful surgeries.” Specifically, it alleged that Armor administered “drugs that were not prescribed for him” and failed “to render timely medical attention and treatment for the side effects,” it said. 

Armor denied those accusations before the settlement. 

The presiding circuit judge in the state case is Mily Rodriguez-Powell. 

The federal lawsuit alleged BSO “deprived Campbell of his rights, privileges and /or immunities secured by the Constitution of the United State and Florida by denying him access to medical care.” 

BSO has denied any wrongdoing. 

Armor, based in Miami, has provided medical services to Broward County operated jails since 2004. Recently, Armor was a finalist to provide healthcare services to inmates at Miami-Dade County Corrections and Rehabilitation facilities, but lost out to Prison Health Services, a Tennessee-based company. The Miami-Dade contract, being negotiated now by the parties, could run as long as 11 years. 

Dan Christensen contributed to this report. William Gjebre can be reached at wgjebre@browardbulldog.org

Daniella Howard with President Obama

By Dan Christensen, BrowardBulldog.org

An aide and fundraiser to former Congressman Robert Wexler has pleaded guilty to providing false information to the Internal Revenue Service about a $15,000 kickback she received for a controversial real estate investment by the South Florida Democrat’s campaign. 

Daniella Howard, 44, of Pompano Beach, was sentenced by a federal judge to serve one year on probation and pay the government $3,200 in restitution. She could have drawn up to a year in prison and a fine of $10,000 on the misdemeanor charge. 

Howard still faces possible civil tax penalties, according to charging documents. 

Prosecutors kept Howard’s case low key and moved it swiftly through the court system. Charges were filed on April 11, a Monday. By Friday, April 15, Howard’s plea was taken and a judge had pronounced sentence. No press release was issued by the U.S. Attorney’s Office. 

Authorities would not answer questions about the case, or say whether the joint FBI/IRS money laundering investigation that led to the criminal charge against Howard is now concluded. 

“We don’t really have a comment,” said Assistant U.S. Attorney Marlene Rodriguez, an office spokeswoman. 

Howard, who also goes by the name Daniella Acosta, signed a plea agreement with Assistant U.S. Attorney Stephen Carlton on Feb. 4, court records show. Carlton is a public corruption prosecutor based in West Palm Beach. 

In exchange for Howard’s cooperation, the government agreed to recommend the judge go easy on Howard based upon her “recognition and affirmative and timely acceptance of personal responsibility.” 

Federal Election Commission (FEC) records show that Howard was on the Wexler’s campaign’s payroll as recently as the last quarter of 2010. 

Bruce Udolf, Howard’s defense lawyer, would not discuss the case. “I have no comment other than to tell you that I was advised the investigation is over,” he said. 

‘Fire-breathing liberal’ quits 

Wexler, a self-described “fire-breathing liberal” whose district included parts of Broward and Palm Beach counties, surprised the political world in October 2009 when he announced that he was quitting his politically safe seat in Congress to take a job as president of a Washington-based Middle East think tank founded by Slim-Fast founder S. Daniel Abraham. His final day was Jan. 2, 2010. 

Wexler could not be reached for comment. 

In November, Broward Bulldog reported that Wexler stepped down after federal agents interviewed at least four persons about his campaign’s unconventional $150,000 investment in the same real estate deal that has now led to Howard’s guilty plea.  

Howard with Chicago Mayor-Elect Rahm Emanuel

Robert Wexler for Congress, an active political committee that reported $304,000 cash on hand as of March 31, made its initial $150,000 investment in Capital Gains Real Estate Consultants (CGREC), a company whose principal owner was Roy T. Amico. 

Amico was a stockbroker who knew Wexler and managed some of his campaign’s money. He was also Howard’s ex-boyfriend. 

Court records filed by the government say that Howard had the authority to invest campaign funds “subject to the approval of her supervisors.” The records say Howard first sought Amico’s advice about where to invest campaign funds in 1999 – when the campaign and Amico’s office at the Joseph Charles & Associates brokerage firm were in the same building at 2500 Military Trail in Boca Raton. 

Amico got out of the stock selling business and in 2003 founded CGREC along with his brother Armand and Palm Beach political consultant Tom Plant. That November, Howard personally invested $6,000 with Amico, court records say. 

A few months later, in March 2004, Howard invested $150,000 from the Wexler campaign — money contributed by his political supporters – in the same investment at 6.5 percent interest. The investment was approved by Wexler campaign supervisors. 

To secure its investment, the campaign took back a $150,000 mortgage and promissory note on a waterfront home on South Flagler Drive in West Palm Beach. The Amico brothers bought the home for $975,000 in January 2004 with the intent of flipping it to another buyer, Roy Amico said in an interview last fall. 

While the Wexler campaign later got its $150,000 investment repaid with interest, the campaign did not report the transaction on its FEC disclosure reports. By law, campaigns are required to report all “debts and obligations owed to” them. 

Amico pays Howard $15,000 

Court records say that in January 2006 Howard and Amico agreed to reinvest $150,000 of campaign funds into the same home. But this time, Amico paid Howard 10 percent of the investment – $15,000 – which she deposited into her personal account at Wachovia Bank. The transaction was approved by Wexler campaign supervisors, but the records do not say whether they were aware of the kickback. 

In exchange, the campaign received a new mortgage on the property that it did not record at the county property appraiser’s office for more than two years. No explanation was offered in government filings, which inexplicably also misstate the date of the mortgage recording by two years. 

The campaign wasn’t the only investor in the property. Several banks made bad loans, as did an elderly Chicago man who a Palm Beach judge ruled last year was defrauded of $330,000 by Amico and CGREC. 

The real estate crash ultimately sank Amico’s plans, CGREC and the campaign’s $150,000 investment. 

The only person to make money on the deal was Howard, who took Amico’s kickback. 

Howard owns a $400,000 home a block from the beach near Hillsboro Inlet. But when she filed her 2006 tax return, the records say, she underreported “at least $12,000 in income – specifically the $15,000 in funds that she received from Amico.” 

Two years ago Amico was at the center of another controversy involving the Wexler campaign. 

Amico used to work for Fort Lauderdale’s Newbridge Securities. For years, the campaign listed Newbridge as a source of investment income . But in July 2008, the campaign amended 25 disclosure reports dating to 2001 to remove Newbridge’s name. 

A campaign spokesman said at the time that the changes were made to properly identify the firms Amico was affiliated with after he left Newbridge in 2002.

 By Donna Gehrke-White, BrowardBulldog.org

The manufacturer of Enfamil has agreed to pay up to $12 million to settle a class-action lawsuit after a Weston mom alleged in federal court that the pricey, but popular baby formula had falsely advertised that it contained nutrients not available in other products.

A website, www.formulasettlement.com was created last week for an estimated 8 million Enfamil LIPIL buyers nationwide to claim their share of the settlement – up to $12, either in cash or in Enfamil formula.

Enfamil’s manufacturer, Mead Johnson, said it did nothing wrong but decided to settle the Broward lawsuit, along with seven others, to avoid costly court expenses.

“We denied the allegations when the cases were filed and continue to maintain that we did nothing wrong,’’ Mead Johnson spokesman Chris Perille wrote in an e-mail to Broward Bulldog.  “However, rather than spend money fighting the lawsuits, we chose to resolve the case in a way that benefits Enfamil customers.’’

U.S. District Court Judge James I. Cohn in Fort Lauderdale gave preliminary approval to the nationwide settlement in March and will hold a final approval hearing on Sept. 26. People have until Aug. 22 to object.

Still to be determined: How much Weston mom Allison Nelson will receive for filing her lawsuit, said her attorney, William C. Wright of West Palm Beach. It has been proposed that she receive $10,000 plus the settlement that other consumers get.

“She was a real trooper,’’ enduring lengthy depositions in a case that was fiercely fought by both sides, Wright said.

To qualify to be part of the Enfamil lawsuit settlement, consumers must have paid for the formula and not received it as part of the federal government’s Special Nutritional Program for Women, Infants and Children (WIC).

Families who bought Enfamil for less than six months will receive $6 in cash or product. Those who bought it longer will get $12 or product. Purchases must have been made between Oct. 13, 2005 and March 31, 2010. Applications for the settlement can be downloaded here: www.formulasettlement.com.

Meanwhile, the settlement proposes that about a dozen law firms representing consumers around the country share $3.5 million in legal fees and $140,000 in expenses upon final approval by the judge, according to Wright and court documents.

Attorney Wright, the father of two whose two children were on Enfamil as babies, said it is a fine product and that was not the issue of the lawsuit. Rather, he and his client, Nelson, who has two children, believe that no company should be able to falsely advertise.

Nelson and other parents who sued objected to Mead Johnson claiming its Enfamil LIPIL brand offered better health benefits than other formulas. LIPIL is Mead Johnson’s name for a blend of two nutrients found in breast milk that promotes brain and eye development in infants. Enfamil, indeed, included those nutrients in its LIPIL formula. But in advertisements and other company literature, Mead Johnson claimed that Enfamil LIPIL was the only formula to do so.

Nelson said in her lawsuit that was false. Other companies also offer the nutrients – at lower prices. Had Nelson known about the cheaper alternatives, she would have opted to buy those, according to her filings.

Mead Johnson refused to drop the ads or further improve Enfamil so it would offer a distinctly better product, Nelson’s lawsuit alleged.

Competitors protested the Enfamil ads in 2008 to the National Advertising Division of the Council of Better Business Bureaus, according to Nelson’s lawsuit. NAD recommended changes in the advertising, but that did not happen, according to a third complaint filed at the agency in 2009. The National Advertising Division said it was “incredulous” that the Enfamil ads were not changed after two compliance hearings, according to Nelson’s lawsuit.

In addition to the agreed payouts, Mead Johnson has dropped from its advertising the language that touched off the lawsuits.

“The specific claims that were challenged in the lawsuits are not used in any materials today,’’ said spokesman Perille.

By Dan Christensen, BrowardBulldog.org  

Gary Gross's Boca Raton home

Two years after federal arbitrators found he had fleeced millions of dollars from clients with whom he once worshipped, disgraced South Florida stockbroker Gary Jay Gross was among 15 defendants charged last week in a large bank fraud scheme.  

Gross, notorious for being the subject of one of the largest securities arbitration awards ever handed down against an individual, now faces up to 30 years in prison and a $1 million fine if convicted of criminal conspiracy.    

The FBI’s arrest of Gross has stirred mixed emotions among the client-victims he wiped out, including those he recruited as investors while attending synagogue at the Chabad of West Boca Raton.    

“My clients are pissed off and happy at the same time,” said Boca Raton securities lawyer James Sallah. “Gross took out Holocaust survivors, old widows and retirees. We talked to the FBI back then and sent them lots of documentation, but we couldn’t get them interested. Now, lo and behold, he rips off a bank and he gets indicted.”    

Scott Silver, a Coral Springs stock lawyer who works with Sallah, called Gross “the most notorious investment fraud recidivist in South Florida in the past 20 years.”    

“What all my clients keep asking me is, “How does this man still live in a multi-million dollar mansion in Boca Raton?” said Silver.    

Gross, 59, and his wife Teddie, live in a six-bedroom, 6 ½-bedroom “courtyard estate” in a gated enclave of Boca Raton’s exclusive Polo Club. The couple listed their 10,000 square foot home for sale for $3.8 million a few years ago, but took it off the market as home values declined. You can see the prior listing, with a photo gallery, video and full description, here.    

The bank fraud that has catapulted Gross into the public eye once again was a four-year scheme to defraud 10 area banks out of more than $10 million, according to U.S. Attorney Wilfredo A. Ferrer. He described it as “a new twist” on mortgage fraud with bogus applications for small business loans and lines of credit that were approved by corrupt bankers.   

$10 million bank fraud   

Authorities said the investigation focused on Frank Santa, 51, a Boca Raton loan broker whose Palm Beach Business Consultants secured loans for small businesses “that could not legitimately qualify for financing.” Santa, who bribed bankers to approve the loans, raked off up-front finder’s fees of $12,500 to $25,000, they said.    

Seven bank officers and seven customers of Santa’s company – including Gross – also were charged. Those customers included Thomas Correa, a former Broward Sheriff’s reserve officer and an assistant principal at the Lanier-James Education Center in Hallandale Beach, and Jeanne Ward, an ex-BSO investigative analyst.    

The corrupt bankers worked at Wachovia, HSBC, Floridian Community Bank, Fifth Third Bank, Bank of America, Amtrust and Regions Bank, authorities said.    

Nine others were charged as part of the FBI undercover investigation last summer, Ferrer said.    

Gross was charged by information with stealing $213,000 from Wachovia and Regions Bank by obtaining lines of credit for which he didn’t qualify. The use of an information, instead of an indictment, to charge someone often signals that a defendant is cooperating.    

Gross was released on a $50,000 surety bond. Court records do not list an attorney for him.    

In February 2008, The Miami Herald reported how Florida regulators failed to prevent Gross from preying upon the elderly and the infirm despite a trail of red flags. The case prompted the state Division of Securities to significantly tighten its scrutiny of stockbrokers, according to industry lawyers.

Gary Gross

Gross has a long record – more than 100 pages – of disputes with customers and state and federal regulators, according to the Financial Industry Regulatory Authority. Again and again, they said, Gross would put their money into risky investments – like penny stocks – that paid big commissions.    

One of Gross’s customers at Boca Raton’s Axiom Capital Management, who became a creditor when Gross filed for bankruptcy in 2007, was actor Henry “The Fonz” Winkler of television’s Happy Days.  The court later denied Gross a discharge of his debts.    

The most serious complaints against Gross began in 2002 when customers reported that he was putting their money in unsuitable investments against their wishes, and then lying about losses.    

More than 100 of Gross’s clients suffered sizeable losses because of various illegalities. Some, like Henry Drabin, who survived the Nazis at Buchenwald, and his wife Rosalind, filed for FINRA arbitration. They were awarded $418,000 in November 2007.    

The Securities and Exchange Commission banned Gross from the stock trading business in December 2008 as part of a settlement of civil charges brought in the wake of the Herald’s stories.    

Then, in August 2009, FINRA arbitrators awarded $7.5 million to three-dozen other ex-clients in August 2009.    

Millions owed, zero paid    

Gross has yet to pay a penny, though various brokerage firms he worked for have paid out millions, said attorney Sallah.  

The criminal information against Gross alleges that he was involved in the bank fraud scheme from August 2007 through August 2009.    

But one of Gross’s many victims says Gross and Santa’s scheming goes back to at least December 2006.    

Joan Ezersky, 78, is a retired Baltimore schoolteacher whose large losses at Gross’s hands forced her to sell her south Palm home and move back to Baltimore. In an interview, she said that when she first confronted Gross by phone after learning that hundreds of thousands of dollars had been drained from her account he referred her to Santa to arrange a loan “while we get things straightened out.”    

“Gary was on the ski slopes. I said I can’t wait until you get back. Where’s my money? He said I’m going to have a friend of mine in the mortgage business take care of you,” Ezersky said.    

Frank Santa called a half hour later that Saturday, and drove over later to talk in a Mercedes convertible.    

“He said he was going to take me to the bank on Monday morning. He said he knows the manager there who will work with me and set me up with some money to tide me over,” Ezersky said.    

The loan Santa offered was for “$30,000 or $40,000.” He told her that “because your Gary’s good friend, I’ll cut my fee from $8,000 to $5,000.”    

Ezersky, suspicious, didn’t borrow the money. Santa stopped calling.    

“I was delighted to hear that Gary was arrested. I was thrilled,” said Ezersky. “When I heard Frank was arrested, too, it was even better.”

By Dan Christensen, BrowardBulldog.org

Dr. Zachariah P. Zachariah

In a stinging rebuke to the government, a federal judge Monday cleared Fort Lauderdale heart doctor and top Republican fundraiser Dr. Zachariah P. Zachariah of civil insider stock trading charges.

In her 60-page ruling, U.S. Magistrate Linnea R. Johnson said the U.S. Securities and Exchange Commission “failed entirely” to prove its assertion that Zachariah used inside information to collect nearly $1 million in illegal profits trading a pair of Florida stocks in 2005.

“The evidence simply is not sufficient to show that Dr. Zachariah, a prominent cardiologist who has given millions of dollars to charity, who has been appointed to and considered for prominent public service positions, and who has been a devoted father to his sons, would be willing to jeopardize his reputation and his career and put his family in harm’s way all for the opportunity to make what was an insignificant profit to him in light of his means at that time,” Johnson said.

“I’ve always had great faith in our justice system and I knew I’d be fully vindicated in the end,” said Zachariah, the director of the Fort Lauderdale Heart Institute at Holy Cross Hospital and a past chairman of the Florida Board of Medicine. “The government has put me through a long ordeal and I’m happy to be able to devote 100 percent of my attention to my medical practice and my public service.”

SEC Assistant Regional Director Glenn Gordon said it was too soon to say whether his office would appeal. “We got the decision late yesterday and we are reviewing it,” he said.  

Zachariah, a past member of the state university’s Board of Governors and a current trustee at Nova Southeastern University, has been a top Republican money man for more than two decades. He is close to the Bush family, and was an elite fundraiser for both Presidents Bush and former Gov. Jeb Bush.

According to court records and trial testimony, President George W. Bush planned to nominate Zachariah – or “Zee-Zee,” as the former president called him – as U.S. Surgeon General in 2006. The SEC investigation changed those plans.

The SEC accused Zachariah in 2008 of using nonpublic information to profit three years earlier trading the stock of generic drug maker IVAX and jail operator Correctional Services Corp., whose shares rose sharply during takeovers.

The non-jury trial ran 12 non-consecutive days over a seven week period that ended Oct. 8. It included testimony from a pair of corporate chieftains involved in those takeovers – Teva Pharmaceuticals Chairman Phil Frost and George Zoley, CEO of Boca Raton prison contractor, The Geo Group.

Throughout the trial, defense counsel Curtis Miner sought to portray Zachariah as “a model public citizen” who served selflessly on public boards and gave generously to charity.

“He has the trappings of wealth, a nice house, a boat. Does that make him a greedy person? No. It just means he’s successful,” Miner said. Zachariah was also represented by former federal judge and U.S. Attorney Tom Scott.

Zachariah, who lives in a home on the Intracoastal Waterway in Sea Ranch Lakes, took the witness stand to deny wrongdoing. In his testimony, however, he portrayed himself as a physician consumed with playing the stock market between patient visits – likening his strategy of placing “hundreds and hundreds” of trades a year to “gambling.”

Huge stock losses

He said he lost upwards of $20 million over the years.

“I made millions of dollars in the market, and I lost millions of dollars in the market,” he told SEC trial attorney Christopher Martin. “One time I took a portfolio from $40 million up to $60 million in two months. You’d think I was a mini-Warren Buffet. Now, you think I’m a fool.”

The government relied heavily on written records to document Zachariah’s trades, phone calls and inside corporate connections. But the few witnesses the SEC called to testify ended up helping Zachariah, according to the judge.

In her order, Johnson accused the SEC of employing flawed logic and low blows to try and make its case stick.

“The lengths to which the SEC went to attempt to attack the credibility of non-party witnesses, including its own witnesses, highlights the weakness of its claims,” Johnson wrote. “For example, the SEC referred to (Zachariah’s son) Reggie Zachariah as a ‘drinker’ in its closing argument and slides – a bizarre allegation that was entirely unsupported by the record evidence.”

The SEC argued that Reggie, who worked on the Correctional Services acquisition while employed in GEO’s merger department, was one of several possible sources of inside information that his father could have traded on when he bought about 80,000 Correctional Services shares for less than $3a share between May and July 13, 2005. Dr. Zachariah sold those shares for a large profit shortly after GEO announced on July 14 that it would pay $6 per share.

Alternatively, the SEC suggested Zachariah could have learned of the merger from his friendship with Zoley or his political work as a paid GEO consultant.

SEC’s ‘multiple choice theory’

Judge Johnson derided the SEC’s assertions as a “multiple choice theory.” Instead, she said she believed the “credible” testimony of Zachariah, his son and Zoley who denied discussing the merger in advance.

Likewise, the judge discounted the SEC’s allegations about Zachariah’s IVAX trades.

Zachariah was on IVAX’s board in July 2005 when he allegedly got a call from Frost informing him that IVAX had agreed to be acquired by Teva for $26 a share. The SEC said that phone records showed that within minutes Zachariah bought 35,000 IVAX shares for less than $21 a share.

IVAX’s directors were at the time forbidden by law from trading the company’s stock.

Johnson, however, ruled that the phone records were contradictory and unreliable. She also held that Zachariah’s violation of IVAX’s insider trading policy was not intentional. The company had sent the policy to Zachariah after he joined the board that spring, but he testified that he never received or reviewed it.

The judge’s findings were also a vindication of sorts for two other Holy Cross physicians charged along with Zachariah – his brother and fellow cardiologist Dr. Mammen Zachariah and endocrinologist Dr. Sheldon Nassberg.

The SEC had alleged that Zach Zachariah used the inside he information he’d obtained to tip both men. Mammen Zachariah, also a former chairman of the Florida Board of Medicine, and Nassberg paid large sums one year ago to settle their cases.

But the judge’s order suggests they should not have done so. Johnson wrote that she believed the testimony of both men who denied getting any inside information.

By Dan Christensen, BrowardBulldog.org

The $100 million-plus scam behind the collapse of Fort Lauderdale’s Certified Services is a classic South Florida courtroom tale of greed and woe.

Hundreds of investors who bought Certified’s publicly traded stock were wiped out as insiders looted the company, buying luxury cars and diamonds. Insurance companies who did business with Certified got stiffed for tens of millions of dollars in claims. And injured low- and middle-income employees across the country who counted on Certified to provide worker’s compensation insurance learned too late that their coverage was actually a mirage.

“There are victims everywhere,” U.S. Securities and Exchange Commission attorney Christopher Martin said in an interview. (more…)